Inadequate record-keeping means licensed gun owner was able to buy firearms in bulk.
An unemployed Auckland man spent $50,000 on firearms then sold them to gang members and other criminals.
Peter James Edwards purchased 74 rifles and shotguns in just 18 months, then "pimped" the weapons by cutting down the barrel or stock and adding pistol grips and silencers.
The pistol-sized firearms, which are easily carried and concealed, are highly prized in the criminal fraternity and the case has highlighted how easily guns can fall into the wrong hands.
Yesterday, Edwards, 58, pleaded guilty in the Waitakere District Court to supplying firearms to unlicensed individuals, supplying a pistol and supplying methamphetamine. He was remanded in custody and will be sentenced on July 1.
Critics say firearm record-keeping in New Zealand is poor after the system of licensing each firearm was abandoned in 1982 in favour of registering gun owners instead.
The result is that the police have no idea how many guns - legal or illegal - there are in the country or how many stolen or modified guns are in circulation.
Edwards held an A-category firearms licence and bought 69 firearms from Gun City stores in Auckland and Christchurch between May 2012 and last December.
He spent $50,000 on firearms alone but also bought 16,000 rounds of ammunition, pistol grips, folding stocks and silencers.
He modified the firearms in his shed, often removing the serial numbers, then sold them to criminals including patched members of the Head Hunters who are not able to legally purchase weapons.
Licensed gun dealers, such as Gun City, have to keep records of individuals who buy firearms. But those details are not passed to the police unless specifically requested under the Arms Act.
The lack of a database means there are no "red flags" raised with police over licensed firearms dealers making suspicious purchases.
"There is no way of identifying who is buying too many guns," said a source. "There might be an innocent explanation for why someone buys firearms five times in a year, but when someone buys 69 guns in a short space of time ... hang on, that's not right.
"People like Edwards buy these guns, cut them down, add pistol grips and silencers. The gangs like them because they can carry them around easily. It's been a problem for a while."
Speaking from Europe last night, Gun City owner David Tipple said his stores sold tens of thousands of firearms a year and it was not unusual for customers to buy a large number.
So 69 firearms bought by one person over 18 months might not have immediately raised any concerns, he said.
Mr Tipple acknowledged, however, that staff did keep an eye out for any suspicious behaviour.
"We work very closely with the police on a daily basis ... and we are known by the police to support [reporting] unusual activities."
Peter James Edwards
Pleaded guilty to:
• Supply of methamphetamine (representative charge).
• Supply of firearms to non-licensed persons (representative charge).
• Supplying a pistol.